Philip Moore & Company Limited v Surridge

[2018] NZHC 1132

IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY

I TE KŌTI MATUA O AOTEAROA TE WHANGANUI-Ā-TARA ROHE

CIV-2016-485-735

[2018] NZHC 1132

BETWEEN

PHILIP MOORE & COMPANY LIMITED

Plaintiff

AND

ANNE JOSEPHINE SURRIDGE

Defendant

On the papers:
Counsel:	S J Iorns for Plaintiff D Grove for Defendant
Judgment:	21 May 2018

JUDGMENT OF CHURCHMAN J (COSTS)

Introduction

[1]    In a judgment dated 28 March 2018, the Court found that the defendant, Anne Surridge, had breached her obligations under the Fair Trading Act 1986 and intentionally interfered with the business of the plaintiff, Philip Moore & Co Ltd (PMC). Exemplary damages in the total sum of $30,000 were awarded against her.1 The Court invited the parties to settle the issue of costs between themselves but, in the absence of agreement, provided for the exchange of memoranda.

[2]    Counsel have been unable to agree and memoranda have been exchanged. PMC, as the successful party, seeks disbursements and costs on a 2B basis in the amount of $76,850.13.

1      Philip Moore & Company Ltd v Surridge [2018] NZHC 562.

PHILIP MOORE & COMPANY LIMITED v SURRIDGE [2018] NZHC 1132 [21 May 2018]

[3]    Ms Surridge seeks costs of $43,931.00 on the basis that PMC failed to establish any losses. She also submits that an uplift of 50 per cent is appropriate in the circumstances, bringing the total amount sought to $65,896.50.

Costs on filing application for injunction

[4]    PMC commenced the proceedings by seeking and obtaining an injunction. The costs in relation to the injunction, as calculated by PMC, total $5,798.00. Although Ms Surridge does not oppose a cost award in relation to this injunction, she submits that 1.5 days for the preparation of written submissions, which makes up $3,345.00 of this portion of the claim, is excessive. Ms Surridge submits that, in the circumstances, an award of $5,000 for costs relating to the injunction application would be appropriate.

[5]    PMC states that it was wholly successful in obtaining injunctive relief, which it maintains was a completely unnecessary step and ought to have been avoided, and therefore increased costs are sought. It notes that its actual legal costs for the drafting of this application were $7,302.35.

[6]    Under the High Court Rules, all matters relating to costs are at the discretion of the court2 and increased costs may be ordered in relation to any step in a proceeding if a reason exists which justifies the court making an order for increased costs.3

[7]    In the circumstances, which includes some quite egregious conduct on the part of Ms Surridge which necessitated PMC seeking injunctive relief, I am prepared to grant the $5,798.00 sought.

Costs of balance of proceedings

[8]    Counsel for Ms Surridge, Mr Grove, submits that these proceedings, at least after the injunction application was filed and granted, were a complete waste of the parties’ time and money, with the costs incurred by both parties greatly outweighing the award of $30,000 in exemplary damages. Mr Grove submits that Ms Surridge was

2      High Court Rules, r 14.1.

3      Rule 14.6.

right to vigorously defend these proceedings, given that the damages sought by PMC were in excess of $300,000. Ms Surridge therefore seeks increased costs on the basis that PMC failed to act reasonably in pursuit of its claim.4

[9]    PMC also seeks increased costs on the basis that, as provided for by the High Court  Rules,  r 14.6(3)(b)(iii),  there  was  an  unreasonable  denial  of   facts  by   Ms Surridge. Counsel for PMC, Mr Iorns, submits that, while PMC did not obtain all that it sought, the judgment is nevertheless viewed as a vindication. The monetary damage was never the critical aspect of the claim, rather it was control of the company that was sought. Shortly after being granted injunctive relief, PMC had offered to settle the matter with Ms Surridge for $34,566.90 plus loss of control of Kyle Chemicals Limited (Kyle). Ms Surridge, in her Statement of Defence, had described herself as the executive director of Kyle, claiming responsibility for its day to day operations, and consistently refused to acknowledge the actual position. Mr Iorns submits that had she admitted the current factual position from the outset, this matter could have been dealt with without the need for a full trial to establish the facts.

[10]   Although PMC failed to prove its special damages claim and was put on notice in relation to proof of loss well before trial, Ms Surridge was the unsuccessful party and, given her conduct leading up to and throughout these proceedings, I decline to award her any costs against PMC, let alone increased costs. The factual claims she advanced were untenable and contributed to the length and complexity of the hearing. I have considered whether  I should award PMC increased costs on the basis that   Ms Surridge’s refusal to admit the actual situation in relation to the running of Kyle, however, I have decided not to do so. This decision reflects the fact the shortcomings in the way the plaintiff’s case was run contributed unnecessarily to the expense of the proceeding. It must be said that neither party emerges blameless in how they chose to conduct themselves during the course of these proceedings.

[11]   PMC pointed out that it made two settlement offers in the lead up to trial on a without prejudice save as to costs basis. In the initial offer, PMC indicated it would be prepared to settle on payment by Ms Surridge of $150,000 (its calculated actual

4      Bradbury v Westpac Banking Corp [2009] NZCA 234, [2009] 3 NZLR 400, (2009) 19 PRNZ 385 at [27].

losses being $327,635.52) along with the establishment of a joint venture and transfer of Kyle. When this offer elicited no response, a second one was made which was substantially the same but with the payment reduced to $90,000. It was met with a counter-offer that the parties walk away with costs to lie as they fall.

[12]In Sanson v Parval Marketing Ltd, Asher J stated:5

[30] However, a plaintiff cannot generally improve its costs position by sending a letter labelled a Calderbank offer seeking more or less the full amount claimed, and by then seeking to justify an increased award of costs because it was not accepted. What the letter effectively sought was capitulation on the part of the defendants. While the defendants have failed in the proceeding they were entitled to have their day in Court, and whether or not a Calderbank offer is sent the option to capitulate is obviously always before a defendant whether or not offered by the plaintiff. A refusal to accede to a request in writing to so capitulate should not make a defendant's cost position ultimately worse.

[13]   Other than in respect of a counterclaim, Calderbank offers generally flow from the defendant to the plaintiff rather than the plaintiff to the defendant. There may be circumstances when a plaintiff can make a Calderbank offer but they will be unusual. However, for any Caldebank offer to be relevant when it comes to assessing costs, the party relying on it needs to have achieved a better outcome than what they had previously offered to settle for.6 Here, the plaintiff achieved less than their settlement offer. The fact that they made the offer is therefore completely irrelevant to the question of costs. Equally as irrelevant is the defendant’s offer to walk away letting costs lie where they fall.

[14]   There were serious defects in PMC’s case, particularly around quantifying its loss. Despite being put on notice as to these defects, the plaintiff did nothing to address them and failed to establish its claimed special damages. Under r 14.7, the Court may reduce the costs otherwise payable where a reason exists which justifies the Court doing so. It is my view that due to the significant deficiencies in PMC’s case and its failure to establish liability for any of the special damages claim, it is appropriate to reduce its costs by 50 per cent for the balance of the proceedings.

5      Sanson v Parval Marketing Ltd HC Auckland CIV-2006-404-7231.

6      Bluestar Print Group (NZ) Ltd v Mitchell [2010] NZCA 385 at [24].

Conclusion

[15]I hereby award costs to the plaintiff as follows:

(a)costs for the interim injunction of $5,798.00;

(b)reduced costs on the balance of the proceedings of $25,310.50; and

(c)disbursements of $20,431.13.

[16]This comes to a total of $51,539.63.

Churchman J

Solicitors:

Alan Campbell for Plaintiff

kplegal Limited, Auckland for Defendant